FISCAL POLICY AND AGRICULTURAL DEVELOPMENT IN NIGERIA.
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FISCAL POLICY AND AGRICULTURAL DEVELOPMENT IN NIGERIA.
Chapter one
1.1 Introduction
A nation’s financial power is determined by its satisfactory and efficient fiscal policies. Fiscal and monetary policies are the twin policy instruments used by a country to control the level of government expenditure, taxation, and public debt in order to influence economic activity in a desired direction.
The past failure of Nigerian fiscal policies to contribute to growth, wealth creation, and poverty reduction might be better understood within the context of a commonly used concept, the “Natural Resource Curse”.
The natural resource curse illustrates a situation in which a country blessed with a large amount of natural resources fails to transfer that richness into substantial economic growth and development, according to Sham sudden Usman (2008).
In the past, Nigeria’s fiscal policy has failed to insulate the economy from the volatility of oil revenue, resulting in disproportionate real exchange rate appreciation and a negative impact on economic competitiveness.
Procyclical fiscal policy has a negative influence on the quality of government spending, which reduces investment and growth. Rent-seeking behaviour leads to inefficient resource allocation, which has a detrimental influence on growth and development. The issue of quality spending with Inefficiency and leaks in both the capital and operating budgets.
The problem with ill-conceived enterprises. Since 1960, however, the agricultural sector has shown to be vital in promoting economic growth and development. In fact, prior to the discovery and exploitation of petroleum in Nigeria
the Nigerian economy relied on cash generated by agriculture export expansion to support the development of other sectors. Because of its importance in nation building, the agricultural sector has long been a focus of government programmes.
Furthermore, some economists believe that the indirect effect of economy-wide policies on agricultural incentives has been stronger than the impact of policies targeted specifically at agriculture. Conversely, in other circumstances, agricultural policies have had a considerable impact on macroeconomic indicators.
Again, the agriculture sector’s competitiveness in the global market was lost by an overvalued naira exchange rate, ineffective pricing strategies, rural-urban migration, and neglect caused by the oil syndrome.
Thus, its share of the 400/0 in the early 1970s falls below 20% by 1980. In fact, low agricultural production grew so severe that Nigeria became overly reliant on imported food and Agro-allied industry inputs.
1.2 Statement of the Problem
Nigeria has implemented macroeconomic policies that have had an impact on agricultural output growth, both directly and indirectly. The country’s currency rate policy appears to have discouraged agricultural exports in recent years.
The failure of Nigerian fiscal policy in the past to shield the economy from the volatility of oil revenue has resulted in certain economic disruptions, such as excessive real exchange rate appreciation, which has a negative impact on the country’s competitiveness.
The issue of spending quality, which includes inefficiencies and leakages in both the current and capital budgets. Oil syndrome causes rent-seeking conduct, resulting in inefficient resource allocation with a detrimental impact on growth and development. Inadequate pricing policy, followed by rural-urban migration, which reduces labour supply and results in low agricultural output.
According to economic researchers, the indirect effect of economy-wide policies on agricultural incentives has been stronger than the impact of agriculture-specific policies.
1.3 Object of the Study
1. The study’s goal is to look at the long-term trends in fiscal and agricultural policy.
2. The study aims to investigate the relationship between fiscal policy and agriculture sector development.
3. The study aims to investigate policy instruments that will promote research, technical advancement, and agricultural extension services.
1.4 RESEARCH QUESTIONS.
1. How do macroeconomic policies and other varied support policies implemented in the Nigerian economy affect agricultural growth and development?
2. Do agriculture policy have a substantial impact on macroeconomic indicators?
3. Should emerging countries tax the agricultural industry, and is it good for developed economies to safeguard it?
1.5 Research Hypothesis
The following hypotheses will be tested during the course of this study:
Hypothesis 1.
Ho: Macroeconomic policies and other varied support policies implemented in Nigeria have no impact on agricultural growth and development.
H1: Macroeconomic policies and other diverse support policies implemented in Nigeria have a favourable impact on agricultural growth and development.
Hypothesis 2.
Ho: Agricultural policies have no major impact on macroeconomic variables.
H1: Agriculture policy have a considerable impact on macroeconomic variables.
Hypothesis 3.
Ho: Developing countries should not tax the agricultural sector, and protecting the agricultural industry does not benefit industrialised economies.
1.6 Scope of the Study
This study will show a relationship between agriculture and fiscal policy policies aimed at increasing production. The data are expected to span the years 1981-2005.
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